Credit can be an intimidating topic. When it comes to making big financial decisions, credit plays a crucial role in your options. Yet, it seems like there are so many ways it can go wrong. Here’s a simple guide to quickly building your personal credit.

Your credit score is a three-digit number that measures how reliable you are from a financial standpoint. The score ranges from a low of 300 to a high of 850.

While most credit agencies have defined their own ranges, here’s the consensus:

  • A score of 720 or higher is generally considered excellent.
  • A score of 690 to 719 is considered good.
  • A score of 630 to 689 is viewed as fair.
  • A score of 629 or below is considered poor.

Bankers, landlords, mortgage lenders and insurance brokers will analyze your score and determine which products you qualify for and are most suitable for you. A high credit score helps you qualify for more affordable products or deals in the long term. Establishing good credit provides you with the leverage to negotiate lower interest rates on big purchases, like a new car or your first home. It can even help you avoid security deposits on utilities, cell phones and rental properties. In addition, a high credit score gives banks the confidence to lend you money. Building your credit opens doors to numerous privileges.

Here are three healthy habits that can help you get there.

Meet your due dates

Staying on top of due dates is one of the simplest ways to increase your credit score. Paying your bills on or before their due dates shows your credit worthiness. It’s best practice to pay your bills in full if your circumstances allow. But if you can only afford to pay the minimum balance, be sure to always meet your due date.

You can remind yourself of upcoming due dates by scheduling a repeating notification on your phone or digital calendar. And if your bank or credit union offers an automatic payment option, schedule an automatic transfer amount that’s comfortable for you.

Maintain a low credit balance

Low credit utilization shows lenders that you are responsible when it comes to managing your money. That means keeping your credit balance ratio below 30 percent. The lower your credit balance, the higher your credit score.

If the memory of that one splurge has come back to haunt you after reading the last sentence, not to worry: There are ways to make up for infrequent fluctuations in the credit utilization ratio. If you stay on top of your payments and budgets, your credit score will eventually readjust. If you are new to using a line of credit, now is the best time to restructure your monthly budget.

Keep your oldest account open for business

Payment history is the most influential factor on your credit score and stays on your record for seven years. Every late payment or financial stumble is visible to your lender or potential landlord years after the event.

Financial services professionals recommend consumers keep their first credit account open as a testament to building their credit worthiness. You should only close an account if you’re charged high annual fees on an account that you no longer use.

Ask your Paragon banker today for more tips on how to build your credit.

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